September Retail Sales, August International Trade, October UI Claims

Sales Surged in September, Driven by Cars

  • Retail Sales for September added a hefty 1.1 percent, as motor vehicle sales gained 3.6 percent.
  • Ex-auto Retail Sales increased by 0.6 percent with help from clothing stores and gas stations.
  • The August U.S. International Trade Gap was unchanged for the month at -$45.6 billion.
  • Initial Claims for Unemployment Insurance for week ending Oct. 8 dipped by 1,000 to 404,000.

Despite weak job growth and dismal consumer confidence readings, consumers hung in there, doing their part to keep the leaky economy afloat. Retail sales for September beat expectations, increasing by a hefty 1.1 percent as retail auto sales gained 3.6 percent. On an annualized unit basis, auto sales increased from 12.1 million units to 13.1 million units in September. The solid September gain in unit auto sales is attributable to increased sales of light trucks for commercial purposes. But non-auto retail sales also gained a respectable 0.6 percent in September. Clothing store sales increased by 1.3 percent. Gas station sales gained 1.2 percent, even as gasoline prices fell, so it looks like the boost there comes from seasonal adjustment factors in the retail sales series. Furniture stores increased their sales by 1.1 percent in September. Solid retail sales for September are supportive of Q3 real GDP growth, which is expected to register about 2.2 percent

Expectations for the upcoming holiday shopping season are subdued compared to last year’s moderate gains. A clue to what retailers are expecting comes from August international trade data. In August the U.S. international trade gap was unchanged at -$45.6 billion. Total imports slipped fractionally, as did exports. Imports of consumer goods were down $0.8 billion from July, and up a slight $0.3 billion from a year ago. This is suggestive of weak expectations among retailers for the holiday shopping. This view was corroborated by an interesting Wall Street Journal article yesterday saying that lean inbound volumes on California docks now suggest weak expectations by retailers later this year. Initial claims for unemployment insurance for the week ending October 8 declined by 1,000 to hit 404,000, still elevated for this point in an expansion cycle.

Market Reaction: Equity markets opened with gains. Treasury yields are up at the long end. Oil is up to $89.69/barrel. The dollar is up against the yen and down versus the euro.

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